Asian stocks reported their strongest monthly performance in years in October as the month signalled a rebound after fears over China’s slowdown rocked global markets over the summer. Investors responded positively as the U.S. Federal Reserve kept interest rates low and the European Central Bank signalled further easing.
On Friday, investors also took Bank of Japan’s (BoJ) decision to not expand its stimulus program in their stride. Japan's Nikkei 225 Index gained nearly 9.8 percent in October -- its best monthly performance since November 2013 -- and ended Friday's trade up 0.8 percent.
According to Reuters, Asian stocks were poised for their best month since 2012 as global central banks kept stimulus policies intact.
“The general trend is an ongoing recovery from the August and September selloff,” Angus Nicholson, market analyst at brokerage IG told the Wall Street Journal.
Leading the rally, the Shanghai Composite Index gained nearly 11 percent in October after four-straight negative months. The Hang Seng Index rose 8.6 percent in October, after five consecutive months of losses.
However, stock market growth softened over the last week as weary investors exercised caution following the U.S. Fed’s comments, which hinted at a hike in rates in December.
After BoJ’s decision Friday, economists are hopeful of further easing next year. Credit Suisse economist Takashi Shiono told the Journal he believes the Japanese central bank probably will wait until next spring, when it has a clearer picture of inflation that isn’t distorted by weak oil prices.
Investors wary of policy makers’ limitations told the Journal that markets have already priced in the potential benefits of easing.
The Shanghai Composite is down 1.9 percent this week, after three weeks of gains, and The Hang Seng Index is down 3.4 percent this week. Elsewhere in Asia, Japan's Nikkei 225 bucked the trend and was trading up 0.27 percent this week. In India, S&P BSE Sensex reported a weekly loss of 2.78 percent.